Unnamed Debt Collection Agencies, Creditors Or Others

Text (OCR of the scan at left; may contain errors)

In THE MATTER OF .

UNNAMED DEBT COLLECTION AGENCIES, CREDITORS OR: OTHERS File No. 782 3078. Interlocutory Order, Aug. 31, 1979 ORDER DENYING Motion To REIMBURSE Costs OF COMPLYING Wity Suppoena Duces TecumM Creditors Service Bureau of El Paso, Inc. (CSB), moves that it be reimbursed for expenses incurred in complying with a subpoena duces tecum issued on January 22, 1979, which required the production of documents relating, inter alia, to the practices used by CSB to collect consumer debts. The instructions appended to the subpoena provided for the submission of verified copies in lieu of originals for any of the responsive documents.

A subpoena respondent is not automatically entitled to the reimbursement of expenses incurred in complying with Commission process. Rather, subpoenaed parties are expected to absorb reasonable expenses of compliance as a cost of doing business. SEC v. Arthur Young & Co., 584 F.2d 1018, 1033 (D.C. Cir. 1978), cert. denied, 99 S. Ct. 841 (1979); FTC v. Texaco, Inc., 555 F.2d 862, 881-82 (D.C. Cir.) (en banc), cert. denied, 431 U.S. 974 (1977) (modification of investigative subpoenas is not justified “unless compliance threatens to unduly disrupt or seriously hinder normal operations of a business”). To justify its claim for reimbursement, CSB must demonstrate that the costs of complying with the Commission subpoena are unreasonable (see FTC v. Rockefeller, 591 F.2d 182, 190 (2d Cir. 1979); United States v. Tivian Labs, Inc., 589 F.2d 49, 55 (1st Cir. 1978); United States v. Davey, 543 F.2d 996, 1000 (2d Cir. 1976)), and in determining whether a subpoena respondent has met that burden, we consider chiefly the costs of compliance in relation to the size and resources of the producing party. E.g., FTC v. Carter, 464 F. Supp. 688, 641 (D.D.C. 1979), appeal docketed, No. 79-1331 (D.C. Cir. Mar. 27, 1979). The costs incurred by CSB in responding to the subpoena—$847.37—seem minor in relation to the financial position of the firm. Moreover, we note that the subpoena calls in substantial part for the production of corporate, operating, and other business records which are incident to the conduct of CSB’s business and under such circumstances, a claim for reimbursement is difficult to sustain. See FTC v. Rockefeller, supra, 591 F.2d at 191. Finally, CSB has not shown that its decision to incur copying expenses ($100.00) was based on a business need for continued access to WANAVAAseses are Veen ee U8 | .

388 Interlocutory Order the originals. See SEC v. Arthur Young & Co., supra, 584 F.2d at 1033- 34.1 It is ordered, That the motion be, and it hereby is, denied. By order of the Commission.

1 The cases cited by CSB, United States v. Farmers & Merchants Bank, 397 F. Supp. 418 (C.D. Cal. 1975), and United States v. Friedman, 582 F.2d 928 (8d Cir. 1976), provide no support for CSB’s reimbursement claim. In Farmers & Merchants Bank, the court’s decision to require reimbursement was based on the fact that the Internal Revenue Service subpoena was directed not to the target of an investigation (as here) but to the target’s wholly uninvolved bank (a “mere [repository] of information performing a service for the government in complying with the {subpoena ]”, FTC v. Rockefeller, 591 F.2d 182, 191 (2d Cir. 1979)), and that compliance with the subpoena was “not predictably part of the banking business.” 397 F. Supp. at 420. Moreover, other courts which have considered a bank’s entitlement to reimbursement for costs incurred in complying with an IRS summons have: disallowed such claims based on the reasonableness of the expenditures and the duty to comply with agency process. Eig., United States v. Continental Bank & Trust Co., 508 F.2d 45, 48 (10th Cir. 1974); United States v. Covington Trust & Banking Co., 431 F. Supp. 852, 354-356 (E.D. Ky. 1977); United States v. Mellon Bank, 410 F. Supp. 1065, 1069-70 (W.D. Pa. 1976); United States v. Bremicker, 365 F. Supp. 701, 703 (D. Minn. 1973); United States v. Jones, 351 F. Supp. 182, 184 (M.D. Ala. 1972); of. California Bankers Asan. v. Shultz, 416 U.S. 21, 50 (1974). In Friedman, the court stated that such claims require findings on the extent of the burden of the record search and observed: “A bank, whose business is the facilitation of financial transactions, and which keeps records of all customer dealings as a matter of course, if not law {footnote omitted], may be required [as part of the cost. of doing business, to make an unreimbursed record search ].” 582 F.2d at 987.

CSB also relies on 5 U.S.C. § 508 (1977), and Fed. R. Civ. P. 45 and 81(a\3), none of which is applicable here. 5 U:S.C. § 508 applies only to allowances (e.g., for the cost of travel) for witnesses who appear at agency hearings pursuant to subpoena, and not to the costs of searching for and reproducing subpoenaed materials. The Federal Rules of Civil Procedure apply only to proceedings in United States district courts and not to proceedings before administrative agencies. See FTC v. Kujawski, 298 F. Supp. 1288, 1289 (N.D. Ga. 1969); Fed. R. Civ. P. 1. Complaint 94 F.T.C.